your company pension - vmware...knowing your company pension is there in the background, quietly...

Your company pensionA guide to help prepare for the retirement you want

Group Personal Pensionwith Salary Exchange

Supporting literature and tools to help youmake decisions about your company pension

To access the literature and tools visit www.scottishwidows.co.uk/joining

After reading this literature, we recommend that you either save or print a copy and keep

this safe for future reference. If you don’t have internet access or would prefer a paper

copy of this information, please call 08457 556 557.

Literature

Key Features and Illustrations

The documents above provide important informationabout your company pension and should be read.

Pension Investment Approach Guide

Pension Funds Investor’s Guide

Your guide to with-profits

Policy Provisions

Important notes for applications

Tools

Indulge-o-meter

Find out if spending a bit less on treats could give you spare cash for your company pension.

Pension Planner

Use this to show how much you might get when you retire.

Investment Decision Tool

Use this to automatically match yourself to the mostsuitable investment option for you.

1

What’s in it for me? 3

• Some considerations

What’s best for me? 5

• Contributing to a pension 5

• Why contribute? 6

• Salary exchange 7

• What about relying on the State or using other investments? 10

• How much income will I need to live on when I stop work? 12

• How much should I pay into my pension fund? 14

• How will my pension fund be invested? 16

How to contribute 26

• What next? 26

Contents

We hope this guide answers all your questions, but if not, please speak to the financial adviser for this

company pension or your own financial adviser.

2

What we mean when we say:

Company pension

This Scottish Widows Group Personal Pension Plan.

Pension fund The company pension fund held in your name. Whenyou retire, this fund will be used to pay a taxable incomefor life together with a tax-free cash sum if chosen.

Tax-efficient investment

Our pension investment funds are generally free of UK income and capital gains tax. However, we can’treclaim tax deducted at source from the dividends of UK company shares. Tax rules can change.

Taxman

HM Revenue and Customs.

Salary exchange

Salary exchange is an agreement between you and your employer where you exchange part of your grosssalary (this is your salary before tax) or bonus in returnfor a non-cash benefit such as a pension contribution.

You choose an amount to exchange and it is taken fromyour gross salary so no National Insurance Contributions(NICs) are paid on it. The exchanged amount goes intoyour pension as an employer contribution.

Tax relief

If you choose to make personal contributions to the plan, outside of the salary exchange arrangement, thesecontributions may be eligible for UK tax relief. We willclaim basic rate tax relief on your behalf and invest it inyour plan. If you are a higher or additional rate taxpayeryou may be able to claim additional tax relief on thesecontributions via your self-assessment tax return.

The value of the tax benefits of a pension plan dependon your personal circumstances. Both your circumstancesand tax rules may change in the future.

We/us

Scottish Widows.

Income for life

The money your pension fund will pay out once youretire which is taxed in payment. If you decide to take a cash sum when you retire, it’s normally tax-free.

Retirement date

Your selected retirement date.

Total Annual Fund Charge

The charge made for managing and investing your plan.

3

What’s in it for me?Here are some reasons why you should consider starting contributions into your company pension

• When you start paying in, your employer will normally start paying in too

• Using salary exchange to pay your pension contributions means you pay reduced

National Insurance Contributions (NICs)

• The sooner you start paying in, the longer your pension fund has the opportunity

to grow

• If you leave your job, you can take your pension fund with you, including the

payments your employer has made

• When you retire, you can normally take a tax-free cash lump sum, plus a taxable

income for life

• To help make your investment decision easier, we have designed some simple

investment tools

4

John, 27, Glasgow

By starting to pay my pensioncontributionsthrough salaryexchange ratherthan directly, I can pay moreinto my pensionand keep my takehome pay thesame.

“

”

5

What’s best for me?A step-by-step look at making your pension decisions

Contributing to a pension

With both your employer and the taxmanhelping you save, it literally pays you tocontribute

Scottish Widows is working with your employer andtheir pension advisers, to provide this company pension.

If you contribute, it could be of life-long benefit to you.By giving you this opportunity, your employer isshowing how much they value:

• Your contribution to their business, and

• Helping you with your financial security inretirement.

Avoid having to work ‘til you drop

Whatever your personal ambitions, you’ll need moneyto enjoy life to the full. That’s where this companypension could help.

UK state retirement ages are going up. Depending onyour age now, you may have to wait until 68 beforegetting your Basic State Pension.

But, by contributing this company pension you may be in a position to retire earlier or have a better lifestylewhen you eventually stop work.

Whatever you want your retirement to be, having a pension could help youenjoy it more

Giving up work doesn’t mean giving up living. Whenyou retire, what do you think you’ll be looking forwardto most?

� your choice

No longer having to work

Spending more time at home and with your family

Taking up new activities that you haven’t had time for to date

Or something more exotic?

Seeing more of the world

Buying a place in the sun

Moving abroad

Enjoying the simple pleasures in life?

6

Why contribute?

A company pension is a highly tax-efficientway to help get the retirement incomeyou need

Unless your retirement is already on the horizon, youmay struggle to picture exactly what you’ll be doing in 20–40 years’ time. But, whatever you want yourretirement to be, a company pension should help giveyou a financial cushion to enjoy it that bit more.

• When you contribute, there’s the feel-good factor ofknowing your company pension is there in thebackground, quietly doing its job.

• Because it’s earmarked for your retirement, youcan’t dip into your company pension or fritter itaway. So, although it’s tied up until you retire, you should be able to rely on it being there when the time comes.

• You don’t have to retire or stop work before takingyour company pension. You can normally start takingyour pension at any age from 55. But remember,the earlier you take your pension, the less time yourpension fund has the opportunity to grow.

The sooner you start contributing, the longer your contributions have the potential to grow

Your retirement may seem a long way off, but don’t fall into the trap of putting off contributing becauseyou’ve got plenty of time. Take it from people retiringtoday, it will come round much faster than you think.

The flip side, of course, is that the longer you delay themore you’d need to pay in to try and get the same sizeof pension income.

The longer you live, the more moneyyou’re likely to need

Most people retiring at 65 will now live to their early-80’s (based on current figures from the Office for National Statistics):

• Even by the time you’ve read this guide, the average life expectancy will have increased by about 5–10 minutes.

With new medical advances helping to cure life-threatening diseases, your life expectancy could continue to rise.

It’s never too late

Don’t assume it’s too late for you to contribute. Thechances are you could still have a lot to gain. In mostcases, even a small pension is better than none at all – especially when your employer and the taxman are helping to pay for it.

7

Salary exchangeYour company pension offers salary exchange. This hasthe advantage of effectively reducing the amount ofNational Insurance Contributions (NICs) you pay.

With a typical company pension scheme, the employeepays contributions directly themselves into their pensionplan. However, with salary exchange, you don’t makecontributions direct into your pension plan. Instead,your gross salary is reduced by the amount you want toexchange and this money is then paid into your pensionplan as an employer contribution. Basically, this meansthat by exchanging rather than paying directly youdon’t pay NICs on the amount contributed towardsyour pension plan.

The result of salary exchange is:

• Exactly the same amount will be paid into your pension plan

and• Your net income increases slightly as you

pay less NICs

or• You pay a little extra into your pension plan

and• Your net income stays the same.

There are examples on page 8 and 9 showinghow this works.

Salary exchange is a contractual agreement. Your employer will decide how long the agreement willlast. Normally, you can’t change or stop the exchangeduring the agreement period but your employer mayinclude the option to change the agreement if youexperience a ‘lifestyle change’. Your employer canprovide more information on this.

You can choose to either exchange an amount whichwill allow your take home pay to remain at the samelevel (as if you were making normal employee pensionpayments) and have the NIC saving paid into yourpension fund, or you can keep your pension paymentsat the same level and increase your take home pay.These payments will be shown as employer paymentson any correspondence you receive such as illustrations or annual statements.

Things to considerSalary exchange may not be suitable for everyone. It’s important to remember that by opting-in (or by not opting-out) you are entering into a legally bindingcontract. Other things that you should think about include:

• Other benefits which are linked to your salary, forexample, benefits on death and over-time rates.

• Statutory benefits linked to your lower salary mayalso be impacted. These include:

– State pension.

– Statutory maternity, paternity and sick pay.

– Working or child tax credit.

• As mortgage lenders usually base the amount whichcan be borrowed on the salary after the exchange,this will reduce the amount that you can borrow.However, your employer may decide to maintain a ‘notional salary’ (your original salary with noexchange). This is useful for things like mortgagereferences, over-time, life assurance multiples andsalary reviews.

You may wish to speak to your employer or financialadviser for more information on salary exchange andwhether it is suitable for you.

Remember

Your employer may also be payingtheir own contributions to yourpension plan.

Here’s how it works for basic rate taxpayers

Let’s assume:

• You’re a basic rate tax payer earning £24,000 a year

• You currently pay a gross pension contribution of£1,200 a year (or £100 a month)

• You now agree to a salary exchange of £1,412 a yearto keep your take home pay the same but pay moreto your pension.

In the above example you have increased your pensioncontributions to £1,412 gross a year but kept your takehome pay at the same level.

Let’s look at another example. This time we’ll assume:

• You’re a basic rate tax payer earning £24,000 a year


• You now agree to a salary exchange of £1,200 a yearto keep your pension contributions at the same leveland increase your take home pay.

In the above example you have kept the gross paymentsto your pension at £1,200 and increased your take homepay to £18,322 a year.

Both the above examples assume that:

• You have a personal allowance of £9,440 a year (so you only pay tax on any amount earned above that) and

• You only pay NICs on any amount earned over £7,755, this is the ‘primary earnings threshold’ for tax year 2013/14.Please note: The NIC rate for employees is 12%.

You should remember that these are only examples and they aren’t guaranteed. The value of the tax benefits of apension plan depends on your individual circumstances. Your circumstances and tax rules may change in the future.

Please note: these examples look only at the employee contributions. Your employer may also be paying to your pension plan.

Tax year 2013/14 Before Afterexchange exchange

Gross earnings £24,000 £22,588

Tax you pay £2,912 £2,630

National Insurance £1,950 £1,780you pay

Net earnings after £19,138 £18,178tax and NI

Minus current £960 net n/a as amount pension contribution (£1,200 gross) has been

exchanged

Take home pay £18,178 £18,178



Tax you pay £2,912 £2,672


Net earnings after £19,138 £18,322tax and NI

Minus current £960 net n/a as amountpension contribution (£1,200 gross) has been

exchanged

Take home pay £18,178 £18,322

8

9

Here’s how it works for higher rate taxpayers

Let’s assume:

• You’re a higher rate tax payer earning £60,000 a year


• You now agree to a salary exchange of £6,207 a yearto keep your take home pay the same but pay moreto your pension.

In the above example you have increased your pensioncontributions to £6,207 a year but kept your take homepay at the same level.

Let’s look at another example. This time we’ll assume:

• You’re a higher rate tax payer earning £60,000 a year


• You now agree to a salary exchange of £6,000 a yearto keep your pension contributions at the same leveland increase your take home pay.

In the above example you have kept the gross paymentsto your pension at £6,000 and increased your take homepay to £38,283.

Both the above examples assume that

• You have a personal allowance of £9,440 a year (so you only pay tax on any amount earned above that) and

• You pay 20% tax on your earnings up to £32,010 and then 40% on any earnings above this amount;

• You pay NICs of 12% on any amount earned between £7,755 and £41,450 and NICs of 2% on any amount earned over £41,450.

• You do not have any other taxable income.

Higher or additional rate taxpayers can claim additional tax relief on any personal contributions they make via their self-assessment tax return.

The personal income allowance will be reduced for those with incomes over £100,000, tapering down to zero. Please ask your financial adviser for more details.

You should remember that these are only examples and they aren’t guaranteed. The value of the tax benefits of apension plan depends on your individual circumstances. Your circumstances and tax rules may change in the future.

Please note: these examples look only at the employee contributions. Your employer may also be paying to yourpension plan.



Tax you pay £13,822 £11,422


Gross earnings after £41,763 £38,283tax and NI

Minus current £4,800 net n/a as amount pension contribution (£6,000 gross) has been

exchanged

Take home pay (before reclaim of £36,963 £38,283higher rate tax relief)

Higher rate tax relief n/a as amounton gross pension £1,200 has beencontribution exchanged

Final disposable income £38,163 £38,283



Tax you pay £13,822 £11,339


Gross earnings after £41,763 £38,163tax and NI

Minus current £4,800 net n/a as amount pension contribution (£6,000 gross) has been

exchanged

Take home pay (before reclaim of £36,963 £38,163higher rate tax relief)

Higher rate tax relief n/a as amounton gross pension £1,200 has beencontribution exchanged

Final disposable income £38,163 £38,163

What about relying on the State or using other investments?A pension is one of the best ways to save for yourretirement, but it’s not your only option.

What will I get from the State?

Like most people, you’ll probably get something fromthe Basic State Pension.

The age at which you first receive the State Pensionwill depend on your date of birth, but is expected toincrease gradually to 68 by 2046. So many of us mayhave to work longer than we thought.

Here are the current amounts for the tax year 2013/14.

Will I get a full State Pension?

You’ll need to find out. According to the Department for Work and Pensions, 15% of those reaching StatePension Age are entitled to less than the full amount of Basic State Pension.

How much you get will depend on how much you havepaid in NICs during your working life. People reachingtheir State Pensionable Age (SPA) will need to have paidthem for a full 30 years.

As a result of salary exchange, your NICs will be lower.This may impact your State Pension.

How do I get a State Pension forecast?

You can find out exactly how much money to expect bycontacting The Pension Service. You can ask for a forecastby ringing them on 0845 3000 168 or applying for oneonline at www.thepensionservice.gov.uk

Will I get the State Second Pension?

How much State Second Pension (this is sometimes paid in addition to the Basic State Pension) you receivewill be based on a combination of factors, including:

• Your average earnings

• How long you’ve been employed

• Your National Insurance Contribution history.

If you are resident overseas or a non UK national, thestate benefit you’re entitled to (if any) may differ fromthose described above. Please speak to your financialadviser for further details.

Basic State Pension Single person Married couple

Weekly amount £110.15 £176.15

Monthly total £477.31 £763.31

Yearly total £5,727.80 £9,159.80

10

11

Your employer can pay in# � � � �

You can exchange your salary and increase your take home pay

or your pension contributions� � � �

Other individuals can pay money in on your behalf � � � �

(and you benefit from tax relief)

You can’t spend the investment before you retire � � � �

You can take some of the proceeds or benefits tax-free � � � �

All of the income or proceeds is tax-free �** � �* �**

You don’t have to give up your time to manage things � � � �

See how your company pension compares to some other investment options

What else could you be relying on in your old age?

Some people enjoy planning their finances and being in control. Others avoid thinking about it for as long as possible,and some do nothing at all.

There are a wide range of investments out there and some or all of them may play a part in your thinking, alongside thiscompany pension. Take a look below at some other options available to UK residents, and see how well they compare.

Yourcompany Buy-to-let Inheritingpension property money ISAs

Investment options

# Your employer may change their level of contributions. Any employer contributions would stop if you leave the company.

* If under the UK inheritance tax nil rate limit, this can be tax-free.

** Please note it’s not possible to reclaim the 10% tax credit on UK dividends.

Tax treatment depends on your personal circumstances and may be subject to change in the future.

For more information on any of these investment options or their tax implications, please speak to a financial adviser.

How much income will I need to live on when I stop work?

About two thirds of your earnings may be a good yardstick

Everyone’s lifestyle, expectations and spending habits are different. But most people could live on about two thirds of their earnings.

Would two thirds of your current income be enough to live on? Have a think about your expenses now and what they’llbe like when you stop working. Below we’ve tried to give you some ideas on ongoing, reducing, increasing and one-offexpenses. Think about your own circumstances.

Expenses

Ongoing Reducing Increasing One-off

food mortgage paid off leisure activity costs buying a car

drink travel to work medical or care costs holidays

clothing work clothes replace the

billswashing machine

The income needed to cover these various expenses can come from a number of sources e.g.:

• buy-to-let property

• income from savings

• freelance work

But a pension plan could be key to helping you put a bit more away to help make sure you have enough money in retirement to do all the things you plan.

The next section will help you think about how much to pay in.

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13

If I didn’t put themoney into mypension, I’d onlyspend it onthings I don’treally need.

Sarah, 30, London

“

”

I could find about

How much should I pay into my pension fund?Very few pensioners complain about having too muchmoney. So it’s probably best to pay in as much as youcan comfortably afford.

But remember, by paying into your pension throughsalary exchange rather than contributing directlyyourself you can increase your pension contributions or your take home pay, plus your employer may also pay into your pension fund.

Finding enough spare cash for yourcompany pension

With all the pressures on your bank account – mortgage,credit cards, bills, car, kids, leisure activities etc – youmay wonder where you’ll find enough money to payinto your company pension each month.

If so, it might be worthwhile taking a closer look at yourspending. You may be surprised by how quickly littleitems of non-essential expenditure add up. This mayencourage you to pay some of this money into yourcompany pension instead – without spoiling your fun!

How much extra could you find in your budget?

If you kept a close eye on your shopping this month, how much extra do you think you could find to pay intoyour pension?

Try using the Indulge-o-meter in the supporting toolsto find out how much you’re spending on life’s littleluxuries.

a month£

Topping up your company pension with extra payments

If you want to give your company pension a boost, you can increase your payments or add lump sums toit at any time. For example, using money from:

• Windfalls or winnings

• An inheritance or gift

• Other savings from your bank or building society.

Plus, you’ll normally get UK tax relief on these paymentstoo. You can read more about tax in the Key Features.

Increasing your payments as the years go by

A lot could happen to the value of today’s money bythe time you actually retire. So you’ll need to think abouthow inflation could affect you.

To help you judge how quickly the rising cost of living canaffect the buying power of money, here’s an example.

Increasing your payments to your pension each year canhelp protect against the effects of inflation, and may helpmaintain the purchasing power of your pension.

Little cutbacks could give you some spare cash to pay into yourcompany pension.

Approximate monthly saving

Walk to work once a month instead of taking a bus £1.20

Eat one less chocolate bar a week £2.30

Buy one less magazine a week £13.00

Catch one less taxi a month £8.50

Smoke one less cigarette a day (30p each) £9.00

Have one less take away for two, a month £20.00

Buy one less DVD a month £10.00

Have one less glass of wine at the pub each week £16.00

Money you could exchange into your company pension instead £80.00

today £1,000

after 10 years £744

after 20 years £553

What £1,000 is worth based on 3% a year inflation

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15

I’m leaving theinvestment sideof things toScottish Widows.

Iain, 53, Edinburgh

“”

How will my pension fund be invested? You might expect your employer to say how yourcompany pension will be invested. But that’s not thecase – instead, you are free to choose what happenswith your pension fund.

You have two options:

• Simply choose one of our Pension InvestmentApproaches based on your feelings about risk, and let us manage this through to your retirement,or

• Be very ‘hands-on’ – selecting from our wide range of internally and externally managedinvestment funds.

This section of the guide explains what’s involved with both options.

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Cautious

AdventurousAdventurous Pension Approach

A plan using this Pension Investment Approach is expected to have the most frequent and noticeable ups and downs in value. It has thepotential to provide the highest growth over the longer term, but itcould also make the biggest losses.

About our three risk-based Pension Investment Approaches

Not everyone wants to be actively involved with picking investments and keeping a close eye on what’shappening in the market. If this sounds like you, one of our three specially designed Pension InvestmentApproaches may be just what you need. Simply tell uswhich one suits you best.

They all work in a similar way. The difference betweenthem is how much investment risk they take in trying to help your pension fund grow. With all threeapproaches, we gradually reduce the risk the closer you get to retirement, to help protect the final value of your pension fund.

BalancedBalanced Pension Approach

This Pension Investment Approach should have moderate ups anddowns compared with the other two approaches.

Cautious Pension Approach

A plan invested in this Pension Investment Approach should experiencesmaller and less-frequent ups and downs in value than the other twoapproaches. But its growth potential is lower as a result.

Need help choosing?

If you’re unsure which approach may suit you best,use our Investment Decision Tool to find your match.It asks you 10 simple questions to help you decideyour risk approach.

• You’ll find an interactive version in the supportingtools or at www.scottishwidows.co.uk/idt

• Or, use the paper version on pages 19 and 20 of this guide.

What’s special about these approaches?

They take into account the fact that investments need to do different jobs for your company pension at different times:

• for the main part they aim to grow your pensionfund as much as possible – whilst matching the level of investment risk you’ve chosen

• the closer you get to retirement, they graduallyswitch from an aim of ‘going for growth’ to helpingprotect what you’ve built up.

How do we decide which investments to use?

That’s easy. Everything is decided in advance, based on rigorous investment testing. Instead of switchinginvestments in reaction to what’s happening day to dayin the stockmarket, we invest according to the approachyou’ve selected and how close you are to retiring.

When originally designing our Pension InvestmentApproaches, we put a huge range of investments underthe microscope. This enabled us to:

• Rule out unsuitable ones – too risky or not enoughpotential growing power

• Select types we felt were right for Scottish Widowscompany pensions

• Identify what we believe are the best investmentcombinations for people with different ideas aboutrisk and different terms to retirement.

How do we monitor your investments?

We constantly monitor your company pension, to ensureit is invested according to your chosen approach:

• Up to 15 years before you retire – we check everythree months to see if any investment ups anddowns have caused the investment mix to go adrift.If it has, we adjust it. The new mix will be based onhow much closer you are to retirement at that time.

• From 15 years before you retire – we gradually startreplacing some of the higher risk investment fundswith lower risk ones.

• In the last five years before you retire – we graduallystart switching to the lowest risk investment funds.Although this has the effect of reducing thepotential for growth, it helps to protect the valueof your plan during the run-up to your selectedretirement date.

• At your retirement date – your pension fund will besplit approximately:

– 25% in our Cash Fund

– 75% in our Pension Protector Fund

ready to provide your tax-free cash and income for life.

Want more information?

Please see our Pension Investment Approach Guide. For more information on our fund aims and risks, pleaserefer to our Pension Funds Investor’s Guide. You’ll findthese in the supporting literature.

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19

Use our Investment Decision Tool

Our Investment Decision Tool is a quickquestionnaire to show you which of ourthree Pension Investment Approaches may suit you best

An interactive version is in the supporting tools or atwww.scottishwidows.co.uk/idt

What to do

Using the tool, which you can do in just a few minutes:

1. First answer the questions in the panels startingopposite, using the tick boxes as you go. There aren’tany right or wrong answers, so go with your instinct!

2. At the end, add up your scores (these are shownwithin the tick boxes).

3. Then mark your total score on the investment scale overleaf.

Doing this will match you to one of our three PensionInvestment Approaches – Adventurous, Balanced or Cautious.

That’s all there is to it

But the final decision is yours. If you don’t agree withthe result, you’re free to choose a different approach.You’ll be responsible for deciding which investmentapproach suits you best.

If you need any more help deciding please speak to a financial adviser.

Inexperienced

Reasonably experienced

Experienced2

1

0

2. When it comes to investing, how wouldyou describe yourself?

� your choice

Limiting loss is more important than getting

above-average returns

Limiting loss and achieving above-average

returns are equally important

Achieving above-average returns is more

important than limiting loss

2

1

0

3. When it comes to investing, what are you most concerned about?

� your choice

Take it all in cash

Take half cash and half shares

Take it all in shares 2

1

0

1. Your employer offers you a bonus, which you can take as cash, shares or a mixture of both. The shares have a50/50 chance of doubling in value, orbecoming worthless over the next year.What would you do?

� your choice

Get out quickly

Sell some of my investment

Stay put2

1

0

4. If you were investing in the UK stockmarket and it suddenly fell by 40%, what would you do?

� your choice

Potential Loss Potential Profit

-£6,000 -£4,000 -£2,000 £10,000 +£2,000 +£4,000 +£6,000

0

1

2

Not answer and take the £5,000

Eliminate 2 wrong answers, leaving a choice

of 2. If you guess right you’ll have £7,500.

If not, you’ll get only £2,500

Guess the answer. If you’re right, you’ll have

£10,000. If not, you’ll get nothing

2

1

0

6. You are appearing on the hit game show‘Win a Million!’ But you don’t know theanswer to the next question. What wouldyou do?

� your choice

5. This chart shows how much you couldmake or lose in a year, with three imaginaryinvestments of £10,000. But you won’tknow in advance what the result will be.Which one would you invest in?

� your choice All in shares

Mostly in shares, but also other investments

Mostly in lower risk investments but also some

in shares

0

1

2

8. How would you end this statement? “With a long time to go before I retire it’s important to invest my pension...”

� your choice

£15,000 a year

£10,000 a year, plus a performance bonus of

£0 to £10,000

£5,000 a year, plus a ‘sky’s the limit’

performance bonus

2

1

0

7. You’re offered a new sales job with achoice of three pay options. Which onewould you take?

� your choice

My total score is

Switch what’s left into something safer that’s

less likely to fall, but offers lower returns

Stay where you are, in the hope of recouping

your losses when the market picks up again

Stay where you are and invest more money

while share prices are low, in the hope of

making more money when the market

picks up again

2

1

0

10. Two years ago you invested £10,000 in astockmarket fund. But the value recentlyfell to £8,500. What would you do?

� your choice

Avoiding losses

Wanting to make money

Both are equally important 1

2

0

9. When making a big investment decision,what is more important to you?

� your choice

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Using your result

How you invest your company pension is entirely up to you.

If you’re happy with your result, all you need to do is select that approach on your joining form.

If you were on the border of two approaches, you will need to decide which one you prefer. Taking yourretirement date into account may help you do this. For example, if it is:

• Quite a way off, you might go for the approach that has the higher growth potential of the two, or

• Just round the corner, you may want to opt for theone that should have fewer ups and downs.

Of course, you may decide you want to be a ‘hands-on’investor instead. In which case, you can link yourcompany pension to a selection of pension funds from our range. Please see page 22.

Your resultMark your total score on this investment scale, to see which of our three investment approaches might suit you best. If you’d like to know more about each approach, please see the Pension Investment Approach Guide. You’ll find it in the supporting literature.

2019

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16

1514

13

12

11

109

8

7

6

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Adventurous

Balanced

Cautious

Want to take a more hands-onapproach to investing yourcompany pension?

Your other option

If you decide to invest in our investment funds instead ofusing our Pension Investment Approaches, you will beresponsible for choosing funds that suit your attitude torisk. You can invest in up to 10 of them at one time (butthere may be restrictions on the amount you can invest insome funds). Currently switches between them are free.

• Some funds are managed by Scottish WidowsInvestment Partnership (SWIP), and

• Some by other top UK investment managers, suchas Fidelity, Schroders and Henderson.

The investment funds have been placed into our differentrisk approach ratings to help make your investment choiceeasier. You can find out more about them in our PensionFunds Investor’s Guide in the supporting literature.

Please remember, if you go down this route:

• You should regularly review your choice to decidewhether it’s still right for you. If you decide it isn’t,you can ask us to switch to another fund (or funds)as we won’t automatically do this for you, and

• Some of the funds may have a higher yearly chargecompared to those used for the Pension InvestmentApproaches. Please contact us for details of thecharges for each fund.

• We may change the selection of funds we makeavailable at any time.

Is being ‘hands-on’ right for you?

Have you done something like this before? If you’re not confident about making the right moves at the right time, you may want a financial adviser to help you.Most of the investment funds have been placed into our different risk approach ratings to help you choose – but you’ll be responsible for deciding when and whereto invest and if/when to switch.

Our Self Investment Option

Additional investment choices are available through theSelf Investment Option. This allows members to set up a personal pension plan through our Retirement Accountproduct alongside their group pension plan and to investdirectly in a wider range of funds or in stocks and shares.

This option is designed for experienced investors andyou should speak to a financial adviser if you are unsurewhether it is suitable for you.

Please contact your adviser or employer for more details.

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Changing your investment choicelater on

Whatever investment choice you make atthe start, you’re free to change your mindand switch to something else later on

Switching is currently free and you can:

• Ask to do it at any time

• Move from investment funds into one of ourPension Investment Approaches, or from anapproach into one or more investment funds

• Spread your company pension in up to 10investment funds at once.

But you can’t invest:

• In more than one Pension Investment Approach at a time, or

• In both investment funds and a Pension InvestmentApproach at the same time.

Please note:We reserve the right to delay the date of exchange for a switch. The period of the delay will be not more thansix months if the units to be cancelled include units whichrelate to a fund which holds directly or indirectly assetsin the form of real or heritable property. It will not bemore than one month in all other cases.

Time to decide

What investments will you choose for your companypension?

• Are you going to be a ‘hands-on’ investor andself-select investment funds from our wide range of funds, or

• Choose one of our Pension Investment Approaches,and let us do the work?

You may want to make a note of yourinvestment choices below.

Will my pension fund go up and down in value?

Yes, ups and downs are part and parcel of investing. But over the longer term the aim of our investmentfunds and the three Pension Investment Approaches is to achieve long-term growth.

Whatever you decide, remember that the value of theinvestment is not guaranteed and may go up and downdepending on investment performance (and currencyexchange rates where a fund invests overseas).

Adventurous Pension Approach

Balanced Pension Approach

Cautious Pension Approach

Hands-on

Number of years until you retire

Your investment choice

� your choice

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Dean, 38, Edinburgh

I can take my companypension with me if I change jobs or become self-employed.

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Why your company has chosen Scottish Widows

A name you can trust

After researching the market, your employer has chosenus to provide your company pension. Here are somereasons why they felt we came out top:

• In the Ipsos Brand Tracker 2012, consumers ratedus as one of the top financial organisations theywould be very happy to deal with. Ipsos run thesesurveys across the financial services sector. Ipsos is an independent company whose focus is surveybased market research.*

• We’re part of the Lloyds Banking Group, oneof the top 100 companies listed on the London Stock Exchange

• We’re experts in group pensions, we currently lookafter over 40,000 schemes

• Giving an excellent and thoughtful service is veryimportant to us.

• We’ve been around for nearly 200 years, and that’simportant. We’ve been helping people save for along time and we want to see if we can help you do the same.

All these success factors help to make Scottish Widowsone of the UK’s leading financial institutions and acompany you can rely on.

* Ipsos Data is based on a sample of 3,287 consumerswho are solely or jointly responsible for makingfinancial decisions in their household.

How to contributeWhat next?Deciding to contribute will help increase your chancesof a financially secure retirement.

Please read the Key Features and Illustration. These give you important details about how your company pension works.

Need financial advice?

Scottish Widows has not provided you with advice. If you’re not sure if this product is suitable for you,or if you’re not confident about deciding how to invest, a financial adviser may be able to help you. You can:

• Use your own adviser, if you have one

• Speak to your employer’s company pension adviserif they have one

• Find a UK adviser in your local area, atwww.unbiased.co.uk The website is run by the bodyresponsible for promoting professional financialadvice in the UK, so you can be sure everyone listedis fully qualified and regulated

• Visit the Money Advice Service websitewww.moneyadviceservice.org.uk This containsfree, clear, unbiased advice to help you manageyour money.

Overseas applicants

The tax benefits referred to in this booklet are based onScottish Widows’ understanding of HM Revenue andCustoms practices and UK law at the date of publication.

If your country of residence is not the UK, the laws andrules of the country in which you reside could affect thepolicy, including the benefits you can receive. You shouldspeak with legal and/or tax professionals in your countryof residence for full details.

How to contribute

Your employer or their adviser will give you details of howto start contributing to your company pension scheme.

If you are an overseas applicant please speak to youremployer.

After you start contributing

After you start contributing, we will send you a welcomepack which includes:

• Your policy documents, including the terms andconditions (known as policy provisions) that apply to your company pension. The law of England andWales will apply to the policy.

• A personal illustration

• Cancellation details, in case you’ve changed yourmind about contributing

Regular updates

Every year we’ll also send you a statement showing how much has been paid into your pension fund andwhat it’s currently worth.

Remember that all payments made via salary exchangewill show as ‘employer payments’ because you areusing salary exchange.

Online access

By contributing to employer’s company pension, you have online access to your policy. This includes:

• Current and historic fund values

• Access to unit purchase history

• Change address/contact details

• Request copies of previous annual benefitstatements.

Our range of online services provides you with a quickand simple way to keep track of your pension plan.

You can access these facilities online atwww.scottishwidows.co.uk/corporateThere’s a ‘log-in or register’ button at the top of the web page.

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Joining my companypension wasactually a relief.Now I don’t haveto worry about not having one any more!

Paula, 53, Kent

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Notes

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Notes

Scottish Widows plc. Registered in Scotland No. 199549. Registered Office in the United Kingdom at 69 Morrison Street, Edinburgh EH3 8YF. Telephone: 0131 655 6000. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 191517.47783JG 05/13

your company pension - vmware...knowing your company pension is there in the background, quietly...

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